Life Insurance Cover

Life Insurance policies today, as marketed in New Zealand, usually have the following common features:

(a) The cover is 24 hours a day, world wide.

(b) They usually cover death by any cause (including HIV).

(c) Contrary to common belief, the contracts will also pay for suicide, but only after the contract has been in force for 13 months.

(d) One can also buy accidental death cover only, which is substantially cheaper, due to the limitation of risks.

(e) The policy can be owned by oneself, jointly with wife/partner, by a family trust or by an institution when the policy might be used for lending security purposes.

(f) In the event of a claim, the proceeds are paid out free of any tax obligations.

(g) Most life contracts now expire when the life insured attains the age of 100 or older. Historically life contracts used to expire at age 65 or 70.

(h) Some contracts have a terminal illness benefit, which allows the benefit to be paid out in the event of diagnosis of a terminal illness, rather than having to wait until death occurs.

(i) Policies are also available that pay a tax free monthly sum, instead of the traditional lump sum, for a specified period from the date of death.